Laid off - What to do with 401ks and Pensions?

Comments (4)

Are you certain that you absolutely have no other way to come up with the $10k? I really don't think you should touch it if you can. There will be a penalty on the money of 10% + it will become taxable.

I'd say using that money is not a good idea unless you are certain there is no other way. Will he qualify for unemployment?

I would roll it over into an IRA (traditional) and sit on it for a while. The company may also allow him to keep it in their plan for a while until you decide what to do.

We rolled over my pension (about $7K) into an IRA and did the same with the 401K. If you roll it over, I believe you don't pay taxes on it. That's the best solution, if you can manage to survive without that money. I'm not sure if it was a Roth or not, but I don't think so. Call an ELP if you have one and set up an appointment. There's a lot of annoying paperwork with this stuff. Ours took care of all of it. All we had to do was sign stuff and make sure he was doing what we wanted with it.

This particular issue was just on the news last night, and a financial advisor was weighing in w/ her advice. She said, that if your income was less than $100,000 this year, you can roll it into a Roth IRA without any fees/penalities. I believe that you can roll it into a traditional as well, but this advisor seemed to think that the Roth was a better option. Maybe the traditional would involve the fees/penalities? The Roth is post-tax savings, so you won't have to pay when you withdraw. And with that tax law about no penalties right now, it's a good way to move around your money. However, if you really think that you're going to need the money, you may have to take that hit and withdraw it now. I'm thinking of you and hope your DH gets one of those jobs!! Take care!